- Senators Thom Tillis and Angela Alsobrooks reached an agreement in principle to resolve a month-long dispute over stablecoin yield.
- The compromise prohibits rewards on passive balances but allows activity-based incentives tied to payments and platform use.
- The deal aims to prevent “deposit flight” from traditional banks while preserving room for crypto innovation.
A significant legislative hurdle for the Digital Asset Market Clarity Act, known as the CLARITY Act, has been cleared following a preliminary agreement between key U.S. senators and the White House. Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks confirmed on Friday that they have reached an understanding regarding stablecoin yield, a contentious issue that had stalled the bill in the Senate Banking Committee since January.
The core of the dispute centered on whether crypto platforms should be allowed to offer yield-bearing products on dollar-pegged tokens. Traditional banking groups argued that such rewards could trigger a massive drain of deposits from commercial banks, which often offer lower interest rates. Conversely, crypto industry leaders, including Coinbase, had previously withdrawn support for the bill, arguing that banning rewards would be anticompetitive and stifle the growth of the digital asset sector.
The proposed compromise establishes a distinction between passive and active rewards. Under the tentative language, platforms would be prohibited from paying yield on stablecoin balances held passively by users. However, activity-based rewards hose tied to specific actions such as making payments, transfers, or other platform-specific utility\would remain permitted. This middle ground is intended to satisfy the banking sector’s concerns about systemic stability while allowing fintech firms to continue developing incentive-based ecosystems.
“I think what it will do is to allow us to protect innovation, but also gives us the opportunity to prevent widespread deposit flight,” Senator Alsobrooks told The Block and other outlets. Senator Tillis noted that while the negotiations are in a “good place,” the final legislative text must still be vetted by industry stakeholders before the agreement is formally enacted.
While the yield agreement removes a major roadblock, the CLARITY Act still faces a narrow window for passage. Other sensitive issues remain unresolved, including DeFi regulation, illicit finance provisions, and ethics language regarding government officials’ crypto holdings. Furthermore, a Senate Banking Committee markup is expected in late April, leaving a tight schedule before the 2026 midterm election cycle begins to dominate the legislative calendar. Stakeholders warn that if the bill does not reach a full floor vote by May, the chances of a comprehensive federal framework for digital assets passing this year could diminish significantly.
Patrick Witt, Executive Director of the White House Council of Advisors for Digital Assets, called the development a “major milestone,” suggesting that a regulated environment for stablecoins could eventually bring fresh capital into the broader U.S. financial system.
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